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Risk-on mood supports regional assets in early 2017
REGIONAL MACROECONOMIC & MARKET DEVELOPMENTS & OUTLOOK
- Q4-2016 flash GDP estimates confirm that the economies of the region are in good shape
- Private consumption in the driver’s seat on improved sentiment, rising real wages, firmer labor markets and low inflation
- A more challenging macro outlook in 2017 for the region: Limited room for further monetary and fiscal stimulus
- Emerging market stocks as well as external sovereign and corporate debt have broadly extended last year’s gain
- The positive tone spread over to regional assets
- Most EM currencies firmed; but, in the CESEE space have been little changed, with country-specific factors remaining largely at play
- Risks this year are particularly elevated due to a cramped political events calendar in Europe, uncertainty over new US administration’s policies, ECB and Fed monetary policies to remain in the forefront
COUNTRY FOCUS
- Bulgaria: Strong finish for the economy in the past year
- Cyprus: Banking sector deposits increase for the first time since 2013
- Romania: Fiscal risks on the rise
- Serbia: Real GDP growth to accelerate further in 2017
Emerging market equities rally in tandem with improving risk sentiment
